Colony Bankcorp (NYSE:CBAN) & Waterstone Financial (NASDAQ:WSBF) Critical Analysis

Colony Bankcorp (NYSE:CBAN) and Waterstone Financial (NASDAQ:WSBF) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, risk, profitability, institutional ownership, earnings and dividends.

Risk and Volatility

Colony Bankcorp has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, Waterstone Financial has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500.

Institutional & Insider Ownership

50.4% of Colony Bankcorp shares are held by institutional investors. Comparatively, 62.7% of Waterstone Financial shares are held by institutional investors. 3.9% of Colony Bankcorp shares are held by company insiders. Comparatively, 6.0% of Waterstone Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Colony Bankcorp pays an annual dividend of $0.48 per share and has a dividend yield of 2.4%. Waterstone Financial pays an annual dividend of $0.68 per share and has a dividend yield of 3.5%. Colony Bankcorp pays out 29.1% of its earnings in the form of a dividend. Waterstone Financial pays out 39.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Colony Bankcorp has raised its dividend for 7 consecutive years.

Profitability

This table compares Colony Bankcorp and Waterstone Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Colony Bankcorp	15.42%	10.40%	1.06%
Waterstone Financial	14.57%	8.64%	1.33%

Analyst Recommendations

This is a summary of recent recommendations for Colony Bankcorp and Waterstone Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Colony Bankcorp	0	1	3	0	2.75
Waterstone Financial	0	0	1	0	3.00

Colony Bankcorp currently has a consensus price target of $23.00, indicating a potential upside of 14.82%. Given Colony Bankcorp’s higher probable upside, equities analysts clearly believe Colony Bankcorp is more favorable than Waterstone Financial.

Earnings and Valuation

This table compares Colony Bankcorp and Waterstone Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Colony Bankcorp	$151.62 million	2.80	$28.25 million	$1.65	12.14
Waterstone Financial	$201.29 million	1.74	$26.40 million	$1.72	11.33

Colony Bankcorp has higher earnings, but lower revenue than Waterstone Financial. Waterstone Financial is trading at a lower price-to-earnings ratio than Colony Bankcorp, indicating that it is currently the more affordable of the two stocks.

Summary

Colony Bankcorp beats Waterstone Financial on 9 of the 17 factors compared between the two stocks.

About Colony Bankcorp

Colony Bankcorp, Inc. operates as the bank holding company for Colony Bank that provides various banking products and services to commercial and consumer customers. The company offers various deposit products, including demand, savings, and time deposits. It also provides loans to small and medium-sized businesses; residential and commercial construction, and land development loans; commercial real estate loans; commercial loans; agri-business and production loans; residential mortgage loans; home equity loans; and consumer loans. In addition, the company offers internet banking services, electronic bill payment services, safe deposit box rentals, telephone banking, credit and debit card services, and remote depository products, as well as access to a network of ATMs. As of January 20, 2022, it operated 39 locations throughout Georgia. The company was founded in 1975 and is headquartered in Fitzgerald, Georgia.

About Waterstone Financial

Waterstone Financial, Inc. operates as a bank holding company for WaterStone Bank SSB that provides various financial services to customers in southeastern Wisconsin, the United States. It operates in two segments, Community Banking and Mortgage Banking. The Community Banking segment offers consumer and business banking products and services, such as deposit and transactional solutions, including checking accounts, online banking and bill pay services, money transfer services, as well as credit, debit, and pre-paid cards; investable funds solutions comprising savings, money market deposits, individual retirement accounts, and certificates of deposit; residential mortgages, home equity loans and lines of credit, personal and installment loans, real estate financing, business loans, and business lines of credit; and fixed and variable annuities, insurance products, and trust and investment management accounts. It also provides transaction deposits, interest bearing transaction accounts, demand deposits, non-interest-bearing demand accounts, and time deposits; secured and unsecured lines; commercial real estate construction loans; term loans for working capital, inventory, and general corporate use; and personal term loans and investment services. The Mortgage Banking segment offers residential mortgage loans for the purpose of sale in the secondary market. It also invests in a portfolio of securities include mortgage-backed securities, government-sponsored and private-label enterprise bonds, collateralized mortgage and municipal obligations, and other debt securities. The company was formerly known as Wauwatosa Holdings, Inc. and changed its name to Waterstone Financial, Inc. in August 2008. The company was founded in 1921 and is based in Wauwatosa, Wisconsin.